Uber and Lyft settled a years-long legal dispute with the Massachusetts attorney general on Thursday, agreeing to pay their drivers in the state a minimum rate with some benefits.
As part of the settlement, Uber and Lyft will pay $175 million to resolve allegations that the companies violated state labor laws, with most of the money going to independent contractors, state officials said in a statement. But in a win for the ride-hailing companies, drivers will continue to be classified as independent contractors, not employees.
Among the benefits the state won for its gig economy workers were a health insurance plan for drivers who work at least 15 hours a week, expanded accident insurance and a $32.50 minimum wage the hour for the time spent traveling.
The settlement followed similar pay and benefits provisions in New York, California, Washington state and, most recently, Minnesota. Uber and Lyft have spent tens of millions of dollars lobbying local governments against efforts by workers and labor groups to raise driver pay.
“For years, these companies have underpaid their drivers and denied them basic benefits,” said Andrea Joy Campbell, Massachusetts Attorney General. “Today’s settlement holds Uber and Lyft accountable and provides their drivers, for the first time ever in Massachusetts, with a guaranteed minimum wage, paid sick leave, workers’ compensation insurance and health benefits.”
The lawsuit against Uber and Lyft was first filed in 2020 by Maura Healey, the former attorney general.
In separate statements, Uber and Lyft said the deal is a win for their drivers and that maintaining self-employed status is important for flexibility.
“This settlement is an example of what independent, flexible and dignified work should look like in the 21st century,” Tony West, Uber’s chief legal officer, said in a statement.
“We are thrilled to have reached an agreement that works for everyone and builds on similar progress we have made in states like New York, California, Minnesota, and Washington,” said Jeremy Bird, Lyft’s executive vice president of driver experience.
As a result of the deal, both companies will avoid a potential battle over a Massachusetts ballot initiative on driver classification in November.